A pre-emptive strike against multinational entrants is one reason that Australia’s two largest online takeaway food ordering businesses, Menulog and EatNow, have merged.

Unite and conquer: EatNow co-founder Matt Dyer.
AFR

by
Michael Bailey

A pre-emptive strike against multinational entrants is one reason that Australia’s two largest online takeaway food ordering businesses, Menulog and EatNow, have merged.

“With the threatened entry of a number of big overseas players, it made sense for us to unify and combine the best of both our worlds," says Menulog co-founder Dan Katz, who has become chief executive and director of a new entity, Menulog Group, under the deal.

The other directors are his co-founders Leon Kamenev and Kevin Sherman, and one EatNow representative, Jason Rudy of Catch Group, which bought EatNow from co-founders Matt Dyer and his brother-in-law Mark Fleming in 2012.

Menulog had attracted more than 5000 restaurants to its service in its eight-year history, while EatNow had been gaining fast with 4400 restaurants in four years.

Such platforms take about a 10 per cent commission on orders processed through them, the vast majority of which are for home delivery.

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Market share figures for the online takeaway aggregators are hard to come by, but Telsyte e-commerce analyst Steven Noble thinks there is “daylight" between the Menulog and EatNow pairing and their competitors.

“Menulog’s brand is the best known, with the help of above-the-line advertising, but EatNow has been the fastest growing since it got the Catch Group engine behind it," Noble says.

However, he observes that some offshore players are already here – Germany’s Delivery Hero operates in 14 countries – and says it is inevitable that the two giants of the space, Britain’s Just Eat and GrubHub from the United States, would be considering Australia in their expansion plans.

Local knowledge wins

Menulog’s Katz concedes the space has low barriers to entry, which is why he made the approach to EatNow last October for merger negotiations to commence.

“We can plan better together, co-ordinating our marketing and reallocating budgets so they go further, and attract more customers to our restaurant partners," he says.

“We can cherry-pick the best things each of us do, and hopefully protect and grow our own revenues and those we create for our partners, and provide an even better experience for customers."

Being both Australian companies provides some advantage over offshore competitors, Katz says.

“Takeaway food is a domestic business, and management needs to have its finger on the local pulse from a marketing and product perspective," he says.

“We have merchandising teams based here that go out and visit our restaurant partners – and the best form of lead generation is still to literally walk the streets and check out what restaurants are opening up."

Brand choice to remain

Sales teams will merge under the deal, although they will continue to run on different technology platforms and will maintain separate brands despite the potential cost savings of consolidating marketing under one brand.

“It’s important to give customers a choice. For whatever reason, a person will prefer Menulog or EatNow – it could be they just like a particular user interface better. So there’s no reason to change that," Katz says.

Restaurants already partnered with both Menulog and EatNow will eventually be able to receive orders through a single portal, he adds.

Financial details of the deal are not being disclosed – Katz would not even confirm whether money had changed hands.

However, EatNow’s Dyer will remain with the business as general manager of what is now a division of the Menulog Group. The minor Menulog shareholdings held by Gary Munitz and Daniel Sekers, whose Global IT helped design some of the service’s front-end, are also understood to have been retained.

“The growth of people ordering takeaway online, and the number of restaurants realising they have to be able to home-deliver it to them, still has a long way to run," says Eatnow’s Dyer, acknowledging that the marketing efforts of Menulog and EatNow have probably convinced many restaurants to become delivery-capable.